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Corporations Can Now Donate Directly to Candidates (According to One Federal Judge)

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Overturning more than 100 years of settled law, a federal judge in Virginia found that a ban on corporate campaign contributions to candidates is unconstitutional. It appears that in the case, U.S. v. Danielczyk, United States District Judge C. Cacheris did not consider a 2003 Supreme Court case, FEC v. Beaumont, upholding the constitutionality of a ban on direct corporate contributions to federal candidates.

The Danielczyk decision relied heavily on the Supreme Court's much-maligned 2010 decision in Citizens United v. FEC. In Citizens United the Court used unnecessarily sweeping language to suggest that corporations and living, breathing humans must be treated as identical in the campaign finance context. However, Citizens United addressed only the right of corporations to spend money independent of candidates, on ads that supported or opposed those candidates. The ruling did not address the right of corporations to make direct contributions to candidates. For decades the Court has applied a separate analysis to the right to make contributions from the right to make expenditures in political campaigns.

In Beaumont, the Supreme Court correctly focused on the dangers posed by corporate contributions, the lack of expressive consequence of those contributions, and the need to defer to legislative judgments in upholding the ban on direct corporate contributions to candidates. Whether or not the Supreme Court ultimately upholds Beaumont in light of its conclusory and erroneous assertions in Citizens United is, of course, up to the nine justices.

Lower courts are bound by Supreme Court precedent if and until it is overturned by the High Court itself. The Eight Circuit correctly recognized this, ruling only a few weeks ago in a case called Minnesota Citizens Concerned for Life, Inc. v. Swanson, that the ban on direct corporate contributions to candidates remains valid under Beaumont.

Even if the ruling stands, there is an argument to be made that it will make little practical difference. As a result of Citizens United, corporations can spend unlimited sums in opposition or in support of candidates. Direct contributions limits are currently set at about $2,500 per candidate per election. Twenty-five hundred dollars will likely not be transformative under our current campaign finance system. However, it is important to remember that individuals can form an indefinite number of corporations. Whether people would chose to do that, as opposed to simply making independent expenditures, remains to be seen.

The government should appeal Cacheris' ruling on this issue and take the case to the Fourth Circuit Court of Appeals.